Connect with us

Business

Starting Scrap Metal Recycling – Profitable Business Plan

Published

on

copper scrap

Scrap metals are as valuable as any other metal in the present times. Scrap metal is used and unused small parts of metal that have no significant use for the specific purpose for which they were procured. 

In the last 3 decades the recycling business has grown to multifold and is growing each day. Despite being of no use for the time being, scrap metals are also valuable entities that are sold as scrap at relatively good value.

Such scrap metals are procured by the metal recycling businesses from local vendors and waste collectors at a price and are therefore recycled for further usage. Most of these metals are easy melted and are given new form by passing through the designed process of obtaining the metal in its pre-use state.

United States has a huge market that entertains scrap metal and its recycling. As of 2015, the ferrous metal scrap industry was evaluated to be $18.1 billion while the non-ferrous scrap industry was evaluated to be $32 billion.

It can be stated that the scrap metal recycling industry is in itself a very big industry and the market players are earning huge revenue through this. The market is a very competitive one and requires a planned strategy in order to succeed. 

Therefore, if you as a business plan to enter the metal scrap recycling business in United States then you must be prepared beforehand in order to have a smooth ride. Therefore a business plan is required.

Scrap Metal Recycling Business Plan:

As one knows that the scrap metal recycling industry has already grown to an extent that one cannot succeed in this business without a through planning and execution plan. The market is competitive and the players are highly sophisticated.

The first you must do is to venture out and understand the scrap metal recycling market. It is not what one sees from outside. Every industry has its own set of rules and in order to make a place of yours you need to understand the business.

Ask questions to yourself regarding the business and you will get answers that will draw the blueprint of your business plan. Some questions that must be asked are:

  • Do you have any previous experience related to this business?
  • Are you ready to take risks for advancing in this business?
  • Are you entering the business out of sheer curiosity and passion or you have any concrete plans or based on your business sense and understanding?
  • What niche will you choose in metal recycling? Will it concern only one metal type or many?
  • How will you compete with the already established industry? Do you have enough capital and resources?

There are many more questions that will come in your mind as you start to answer these questions. These questions are necessary to be pondered upon since you are in your pre-start stage and you can rectify your plans if you find anomaly in it.

Going into the Business Details:

Recycling scrap metal is in itself a very tedious job. In order to recycle a scrap metal one has to first segregate each metal from each other using scientific process. There are various anomalies in the scrap metal like paint, non-metal materials, plastic, dust, corrosion, etc. which needs to be removed and there is a long process for it.

Overall, the process of recycling is lengthy and time-taking which is resource and money driven. What one can draw from the above is if you are getting into this business then you must be ready to do tedious jobs.

The first step you must take is to study the business very well and then make a plan. Draw outlines of your plan covering all the important aspects of the business. You may be required to look at your business plan many a times while incorporating your business.

All such aspects should be covered in minute details backed with facts and research that cover market aspects, business aspects, financial aspects, resource aspects and profit aspects. 

Here are some of the aspects on which your scrap metal business plan would be based. The list is not exhaustive but is indicative and you can all other necessary aspects you feel necessary for your business. 

 

  • Read, Research and Analyse
  • Give your Plan a Shape
  • Niche in which you will start your recycling Business
  • Your Target Market
  • Resource Mobilisation
  • Capital Investment
  • Labor
  • Utilities for your Business
  • Location of your Business
  • Marketing and Growth of your Business

Read, Research and Analyse

The first basic step you must take is to do ample research in this field. Try to read the market of United States in general then read the market of the state in which you aim to start your business. 

Move to the region of your proposed business and then get specific about the city in which you will operate. As one knows that it is not possible to operate any business in isolation therefore you must look through the whole picture instead of just a small part.

After analysing the national, state and regional market you can easily make an assessment regarding the scrap metal you will choose to recycle. There can be multiple metals that you can recycle but there must be specific category as each such recycling requires different process.

Do a feasibility analysis on the subject and write down the details accordingly. 

Give your Business Plan a Shape

Based on your research you can now give an outline to your business plan by roughly writing down the essentials of your business. It will be carrying the points mentioned above with all the details. 

Since all researches are based on requirements of individuals and for different requirements and location therefore it is obvious that the assessment reached would also be different. 

While writing your business plan you must keep in mind that this plan will not only serve you but will also be used to attract investment, credits and loans from banks. So it must be written in a way that it appeals the other readers and convinces them about its success. 

Do stick to the reality and write whatever necessary based on facts. Deflection from reality will only hamper your execution plans. 

Choose your Niche for Recycling Business

Choose the metal which you will recycle. You can choose a single metal or you can choose multiple metals of the same type which require similar procedure for recycling. 

There are various factors that will influence your choice. Some of them are:

  • Cost required for recycling such metal
  • Complexity and simplicity of procedure required for recycling
  • Magnitude of operation
  • Demand and availability of scrap metal and recycled products
  • Profitability of recycling 

Thus five above points determine the choice going by the business sense. It would be advisable to choose a niche based on profitability and magnitude of operation rather than your favourite choice or just others are choosing the same. 

Location of your business, availability of scrap and demand of recycled product matters. If your business has limited resources and budget then choose a metal whose recycling is easier and cost effective.

Your Target Market

Target market means the market you will target for procuring scrap metals and then selling the recycled metals. You need to choose it wisely in order to get maximum gains. 

Team up with various such scrap metal vendors who generally collect such metals at first hand. There is a whole network that operates at city and regional level and can extend up to state level. 

You can team up with those you feel can provide you with enough recycling metals and can also absorb the goods recycled. Profitability is also an important factor while choosing your target market.

There are various businesses that purchase recycled goods first hand while some purchase value added recycled metals. Value addition boosts up cost while plain recycling gets a bit lesser value.

The location of your target market shouldn’t be far from yours since it requires lots of traveling which will inflict unnecessary cost on you for transporting the goods. 

Resource Mobilisation

Resources play a key role in your recycling business. You will require a spacious recycling place where you will carry out the recycling process. You will also require the needed machines, equipment and tools.

There must be an infrastructure to support your recycling work. A warehouse that will accommodate the recycled as well as to be recycled metals. Transporting vehicles are needed to carry the metals to and fro. 

Supply of water, a sufficient electric supply, drainage system, office space and operating space is also a must for smooth working. Mobilisation of such resources is necessary in order to commence your work.

You can arrange such items as required using your network and contacts. Be in company of those who are already in this business and with someone who is an expert in this. Such person will guide you in mobilising the resources.

Utilities for your Business

Various heavy machines, light machines, containers, concrete tank, tools, electrical equipment are required to carry out the whole process of recycling. It is a step by step process that requires various machines at different stages.

Take help from experts or those already in the business to mark down the required utilities. Take help from experts and technicians along with engineers while constructing the infra of the recycling factory.

All such steps should be taken in a planned way so that everything works in tandem. Regarding the ownership of machines and tools. You can either own them or you can take them on lease. 

There are many such businesses dealing with these issues who generally rent machines for a fixed time. All depends on your budget and requirement. If there is extensive use of some machine then you may purchase them. 

Cost is also a factor that determines the ownership. Some machines are costly while some are easily affordable. Make a sound choice after consulting experts and experienced people already in the business.

Labor

Since your recycling business has various steps involved in it, it is obvious to have workforce in your business. Labor and your choice of niche has close links. If the niche you have chosen requires complex process then you will require large workforce.

A simple recycling process doesn’t need many workforce. Based on your choice and after understanding the operation of your recycling plant you can hire labor including the technicians and engineers. 

It would be appreciable if you get yourself trained somewhere or just work for a brief period in order to be acquainted with the process of recycling. It would be helpful to you in many ways.

After consulting the experts and those already in business you can hire the required labor force. People who are multi-tasking should be your choice as they will help in maintain minimum labor force. 

Location of your Business

Location matters a lot. At regional level, city level and obviously at micro-level. Some important factors that should be kept in mind while choosing the location of your business.

Regional aspect should be taken care of. There are particular regions that deal with specific metal recycling business market while others deal with other metals. Here are some important things should be kept in mind.

  • Availability of scrap metals for recycling at cheap place and cheap transporting
  • Availability of favourable market for selling the recycled goods
  • The location should be closer from your place of business
  • You are getting good profit return from the market concerned

The micro-level place of business means your exact location of your business. It is obvious that based on regulations and guidelines of the concerned local authority you will establish your recycling plant. 

If the required space is a bit big and costly the best choice is leasing the location. If you have enough capital you can own it. Preferable choice should be a land that is already yours or is cheap for lease. Many government authorities even lease lands at cheap prices to promote recycling. You must aware about it.

Capital Investment

While writing the substance of your business and after doing the feasibility analysis you must have got a good idea regarding the capital that needs to be invested. Consulting experts and others those who are in business will also give you a better understanding.

It is necessary to manage the capital efficiently. Cut down the unnecessary cost while at the same time you must also have additional funds for unforeseen situations.

The author expects that you must not be having all the capital that will be required to start and run your business until you start to earn profits. Therefore you must divide the capital required into parts. 

  • Specific amount that you have as your bank balance
  • Funds you will procure from bank as loan
  • Funds you will manage from creditors and investors, if any
  • Emergency funds to meet unforeseen situations

Marketing and Growing your Business

Recycling business isn’t customer oriented where common people come to sell or purchase goods. It is based on a network of people who are already involved in a business. 

You cannot hire few people to go and collect specific metal. You have to team up with those already in this business. You have to team up with local scrap collectors who will supply you the scrap.

Team up with those who you aim to sell your recycled goods. You can do value addition to boost the cost of your recycled goods. Generally it is hierarchy that if followed where you will sell your recycled goods to one and he will sell to someone above him. 

As you progress you can rise up the rank and become a direct supplier or raw materials which will boost your cost. You can have one market or many based on success of your business.

Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Trending